How Some Redditors Tried To Play the Role of Robin Hood
Stealing from the rich and giving to the poor? GameStop stock surges have been steadily making headlines, but where did it all start?
Since early January, GameStop stocks have been kept a close eye on. Many hedge funds shorted the stock, essentially betting on the company to lose value. This article gives a detailed explanation of what has been going on.
So how did millions of people from across the globe unify to boost the price of GameStop stock? The answer lies within the social news platform, Reddit. More specifically, on a subreddit group called WallStreetBets. Through self deprecating jokes and ‘offensive language’, the page is used for discussing stocks and where to invest.
When GameStop stock started to decrease in price, and major investment management firms began to short the stock, Reddit users banded together on r/ wallstreetbets in hopes of sending the stock “to the moon”.
Much of the motivation behind sky rocketing GameStop prices has to do with taking the wealth from the wealthy. Many Redditors saw themselves as a Robin Hood type figure. Posting about “taking from the rich and giving to the poor”.
While many Reddit users took this as an opportunity to participate in something bigger than themselves, others deeply invested themselves into the GameStop surge. Hoping to come out the other side with a hefty profit, WallStreetBets became saturated with posts encouraging GameStop stock holders to hold their stock. By not selling, the value of the stock wouldn’t fall. Pressuring each other to “hold” their stocks, and even harshly insulting those who sold their stocks, became the newest trend on the Reddit page.
An article by Insider writes, “Last week, GameStop stock was worth $40 but due to the purchasing efforts of the members of r/wallstreetbets, it ballooned to a high of $492.” While many have profited from this GameStop endeavor, many have also been left in the red. As of February 12, GameStop is valued at $51.10 according to Google.
While hedge funds, most notably Melvin Capital, shorted GameStop, millions of people did the exact opposite. Apps like Robinhood, WeBull, and SoFi have made trading stocks much more accessible to the general public. These people, retail traders, can make big impacts on the stock market, as seen in the past month. Reddit continues to play an active role in the stock market. Recently WallStreetBets fans have been playing with AMC stock in a similar yet scaled down way to GameStop.
Dawn Allcot in a Yahoo Finance article writes, “Meme stocks, or investments popularized by retail investors based not so much on a company’s true valuation but on internet memes” Getting into the game of meme stocks can have a big payout, but is also quite risky and Redditors have proven exactly that.
